An electronics firm is currently manufacturing an item that has a variable cost

Question

An electronics firm is currently manufacturing an item that has a variable cost of $ 0.50 per unit and a selling price of $ 1.00 per unit. Fixed costs are $ 14,000. Current volume is 35,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable cost would increase to $0.65?, but volume should jump to 50,000 units due to a? higher-quality product.

Based on the given? information, the decision should be to

- Stay as is?

-Add new equipment?

since the profit with the existing equipment is ?$ ( )

?(enter your response to the nearest whole number and include a minus sign if

?necessary).

Explanation / Answer

An electronics firm is currently manufacturing an item that has a variable cost of $ 0.50 per unit and a selling price of $ 1.00 per unit. Fixed costs are $ 14,000. Current volume is 35,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable cost would increase to $0.65?, but volume should jump to 50,000 units due to a? higher-quality product.

Based on the given? information, the decision should be to

- Stay as is?

-Add new equipment?

since the profit with the existing equipment is ?$ ( )

?(enter your response to the nearest whole number and include a minus sign if

?necessary).

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